What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-14 · 82 added, 54 removed, 241 unchanged (36% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets

23 unchanged sentences

Common stock, $ 0.0001 par value;

200,000,000 shares authorized at June 30, 2023 and December 31, 2022;

27,539,620 shares issued and 27,518,895 shares outstanding at June 30, 2023;

200,000,000 shares authorized at September 30, 2023 and December 31, 2022;

27,542,000 shares issued and 27,528,926 shares outstanding at September 30, 2023;

27,471,607 shares issued and 27,425,447 shares outstanding at December 31, 2022

7 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses

3 unchanged sentences

Loss from operations

Other income (expense), net

Total other income (expense), net

Other income, net

Total other income, net

Net loss and comprehensive loss

17 unchanged sentences

Balance at June 30, 2023

Vesting of restricted common stock

Exercise of stock options

Stock-based compensation expense

Balance at September 30, 2023

Stockholders’

8 unchanged sentences

Balance at June 30, 2022

Vesting of restricted common stock

Stock-based compensation expense

Balance at September 30, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

27 unchanged sentences

Capital expenditures included in accounts payable or accrued expenses

Reconciliation to amounts within the consolidated balance sheets:

Reconciliation to amounts within the condensed consolidated balance sheets:

Cash and cash equivalents

12 unchanged sentences

Since its inception, the Company has devoted substantially all of its financial resources and efforts to research and development activities.

As of June 30, 2023, the Company had an accumulated deficit of $ 291.1 million and has incurred significant operating losses, including net losses of $ 42.0 million and $ 46.0 million for the six months ended June 30, 2023 and 2022, respectively.

As of September 30, 2023, the Company had an accumulated deficit of $ 307.9 million and has incurred significant operating losses, including net losses of $ 58.7 million and $ 65.8 million for the nine months ended September 30, 2023 and 2022, respectively.

The Company expects its operating losses and negative operating cash flows to continue for the foreseeable future as it continues to advance its product candidates through clinical trials, maintains the infrastructure necessary to support these activities and continues to incur costs associated with operating as a public company.

The Company anticipates its existing cash and cash equivalents of $ 75.4 million as of June 30, 2023 will not be sufficient to enable the Company to fund its current operating plan and capital expenditure requirements for at least twelve months from the date of issuance of these condensed consolidated financial statements.

The Company anticipates its existing cash and cash equivalents of $ 59.8 million as of September 30, 2023 will not be sufficient to enable the Company to fund its current operating plan and capital expenditure requirements for at least twelve months from the date of issuance of these condensed consolidated financial statements.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

To continue to fund the operations of the Company, management has developed plans, which primarily consist of raising additional capital through one or more of the following:

To continue to fund the operations of the Company, management has developed plans, which in the near term primarily consist of raising additional capital through one or more of the following:

equity or debt financings;

1 unchanged sentence

or other sources.

However, there can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise, and the Company may be unable to obtain additional capital.

As a result, the Company may need to implement cost reduction strategies, which could include delaying, limiting, reducing or eliminating certain costs related to its operations and research and development programs.

However, there can be no assurance that the Company will be able to complete any such transaction on acceptable terms or otherwise, and the Company may be unable to obtain sufficient additional capital.

If the Company is not able to secure sufficient additional capital in the near term, the Company will need to implement cost reduction strategies, which could include delaying, limiting, reducing or eliminating both internal and external costs related to its operations and research and development programs.

In addition, if the Company’s efforts to secure sufficient additional capital in the near term are unsuccessful, the Company may in the future need to seek to engage in one or more other strategic alternatives, including without limitation, the sale or divestiture of some or all of its assets or proprietary technologies.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

6 unchanged sentences

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations.

GAAP have been

condensed or omitted from this report, as is permitted by such rules and regulations.

Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2022 and notes thereto, included in the Company’s Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 2, 2023.

The unaudited interim condensed

consolidated financial statements have been prepared on the same basis as the audited financial statements.

In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of June 30, 2023 and the results of its operations for the three and six months ended June 30, 2023 and June 30, 2022 and cash flows for the six months ended June 30, 2023 and June 30, 2022.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements.

In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of September 30, 2023 and the results of its operations for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022.

Such adjustments are of a normal and recurring nature.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.

The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results for the year ending December 31, 2023 or for any future period.

Principles of Consolidation

4 unchanged sentences

The significant accounting policies used in preparation of the unaudited condensed consolidated financial statements are described in Note 2, “ Summary of Significant Accounting Policies ” of the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, except as noted below.

Collaboration Agreements

The Company analyzes its collaboration agreements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC Topic 808, Collaborative Arrangements (“ASC 808”).

For arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, either by analogy to authoritative accounting literature or by applying a reasonable and rational policy election.

For collaboration agreements where the Company is reimbursed for a portion of its research and development expenses or participates in the cost-sharing of such research and development expenses, such reimbursements and cost-sharing arrangements are reflected as a reduction of research and development expenses in the Company’s condensed consolidated statements of operations and comprehensive loss, as the Company does not consider performing research and development services for reimbursement to be a part of its ongoing major or central operations.

Concentrations of Credit Risk

5 unchanged sentences

Property and Equipment, Net

Property and equipment, net consists of the following as of June 30, 2023 and December 31, 2022:

Property and equipment, net consists of the following as of September 30, 2023 and December 31, 2022:

September 30,

Laboratory equipment

6 unchanged sentences

Property and equipment, net

The Company incurred depreciation and amortization expense related to property and equipment of $ 0.9 million and $ 0.8 million for the six months ended June 30, 2023 and 2022, respectively.

The Company recognized depreciation and amortization expense related to property and equipment of $ 1.4 million and $ 1.3 million for the nine months ended September 30, 2023 and 2022, respectively.

Accrued Expenses

Accrued expenses consist of the following as of June 30, 2023 and December 31, 2022:

Accrued expenses consist of the following as of September 30, 2023 and December 31, 2022:

September 30,

External research and development

7 unchanged sentences

Interest on amounts outstanding under the Loan Agreement accrues at a variable annual rate equal to the greater of (i) the prime rate plus 0.25 % or (ii) 4.75 %.

As of June 30, 2023, the interest rate on the term loan was 8.50 %.

As of September 30, 2023, the interest rate on the term loan was 8.75 %.

The Borrower was required to make interest-only payments on any outstanding balances through December 31, 2022.

3 unchanged sentences

Upon the occurrence and continuation of an event of default, a default interest rate of an additional 5 % per annum may be applied to the outstanding loan balance, and the administrative agent, collateral agent, and lender may declare all outstanding obligations immediately due and payable and exercise all of their rights and remedies as set forth in the Loan Agreement and under applicable law.

As of June 30, 2023, the Company and Borrower were in compliance with all covenants under the Loan Agreement.

The Borrower has the following minimum aggregate future loan principal payments under the Loan Agreement as of June 30, 2023:

2023 (remaining six months)

As of September 30, 2023, the Company and Borrower were in compliance with all covenants under the Loan Agreement.

The Borrower has the following minimum aggregate future loan principal payments under the Loan Agreement as of September 30, 2023:

2023 (remaining three months)

Total future principal payments

1 unchanged sentence

Total note payable

The Company recognized $ 0.4 million and $ 0.3 million of interest expense related to the Loan Agreement for the six months ended June 30, 2023 and 2022, respectively, which is reflected in other income (expense), net on the condensed consolidated statements of operations and comprehensive loss.

The Company recognized $ 0.6 million and $ 0.5 million of interest expense related to the Loan Agreement for the nine months ended September 30, 2023 and 2022, respectively, which is reflected in other income, net on the condensed consolidated statements of operations and comprehensive loss.

Collaboration Agreements

In July 2023, the Company and F.

Hoffmann-La Roche Ltd.

(“Roche”) entered into a clinical trial collaboration (the “Roche Clinical Collaboration”) pursuant to a clinical supply agreement to evaluate XTX101 in combination with atezolizumab (Tecentriq®) in a Phase 1/2 clinical trial consisting of a Phase 1 dose escalation portion assessing the combination in patients with advanced solid tumors and a Phase 2 portion assessing the combination in patients with microsatellite stable colorectal cancer.

Under the clinical supply agreement, the Company is eligible to receive specified cost-sharing payments from Roche, and each company will supply its respective anti-cancer agent to support the Phase 1/2 clinical trial.

The Company will sponsor and conduct the Phase 1/2 clinical trial and retains global development and commercialization rights to XTX101.

The Company concluded that the cost-sharing payments from the Roche Clinical Collaboration are not in the scope of ASC 606 because the Company does not consider performing research and development services for reimbursement to be part of its ongoing major or central operations.

Therefore, the Company applied a reasonable, rational, and consistently applied accounting policy election to record the cost-sharing payments from the Roche Clinical Collaboration as a reduction of research and development expenses in the condensed consolidated statements of operations and comprehensive loss for the period in which a study development event is achieved.

During the three and nine months ended September 30, 2023, the Company recognized a reduction of research and development expenses of $ 2.0 million.

As of September 30, 2023, $ 2.0 million of earned but unpaid cost-sharing payments were included in prepaid expenses and other current assets of the Company’s condensed consolidated balance sheets.

Commitments and Contingencies

4 unchanged sentences

The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement, and management of the leased premises, which it began paying simultaneous with the rent commencement date in March 2020.

As of June 30, 2023 and December 31, 2022, the Company had a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

As of September 30, 2023 and December 31, 2022, the Company had a letter of credit for the benefit of its landlord in the amount of $ 1.6 million, collateralized by a money market account, which is recorded as restricted cash on the condensed consolidated balance sheets.

Preferred Stock and Common Stock

Undesignated Preferred Stock

As of June 30, 2023 and December 31, 2022, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share.

As of June 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

As of June 30, 2023 and December 31, 2022, the Company is authorized to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share under its certificate of incorporation, as amended.

As of September 30, 2023 and December 31, 2022, the Company’s certificate of incorporation, as amended, authorized the Company to issue up to 5,000,000 shares of undesignated preferred stock at $ 0.0001 par value per share.

As of September 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

As of September 30, 2023 and December 31, 2022, the Company is authorized to issue up to 200,000,000 shares of common stock, $ 0.0001 par value per share under its certificate of incorporation, as amended.

Shares Reserved for Future Issuance

As of June 30, 2023 and December 31, 2022, the Company had reserved shares of common stock for future issuance under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the 2021 Stock Incentive Plan (the “2021 Plan”), the 2022 Inducement Stock Incentive Plan (the “2022 Inducement Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows:

As of September 30, 2023 and December 31, 2022, the Company had reserved shares of common stock for future issuance under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the 2021 Stock Incentive Plan (the “2021 Plan”), the 2022 Inducement Stock Incentive Plan (the “2022 Inducement Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) as follows:

September 30,

Shares of common stock reserved for exercise of a warrant

14 unchanged sentences

plus (2) the number of shares (up to 3,967,038 shares) as is equal to the sum of (x) the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan that remained available for grant under the 2020 Plan immediately prior to the effectiveness of the 2021 Plan and (y) the number of shares of the Company’s common stock subject to outstanding awards whether granted under the 2020 Plan or outside of the 2020 Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right and that, prior to the effectiveness of the 2021 Plan, would have become available for issuance under the 2020 Plan;

plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year, commencing on January 1, 2022 and continuing until, and including, January 1, 2031, equal to the lesser of (i) 5 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (ii) the number of shares of common stock determined by the Company’s board of directors.

plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year,

commencing on January 1, 2022 and continuing until, and including, January 1, 2031, equal to the lesser of (i) 5 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (ii) the number of shares of common stock determined by the Company’s board of directors.

On January 1, 2023, the number of shares reserved for issuance under the 2021 Plan automatically increased by 1,373,580 shares.

As of June 30, 2023, there were 3,263,377 shares available for future issuance under the 2021 Plan.

As of September 30, 2023, there were 1,412,759 shares available for future issuance under the 2021 Plan.

2022 Inducement Plan

4 unchanged sentences

Other terms of awards, including vesting requirements, are determined by the Company’s board of directors and are subject to the provisions of the 2022 Inducement Plan.

As of June 30, 2023, there were 220,000 shares available for future issuance under the 2022 Inducement Plan.

As of September 30, 2023, there were 220,000 shares available for future issuance under the 2022 Inducement Plan.

2021 Employee Stock Purchase Plan

3 unchanged sentences

On January 1, 2023, the number of shares reserved for issuance under the 2021 ESPP was increased by 274,716 shares.

Offering periods under the 2021

ESPP commence on each June 1 and December 1, and end on the following November 30 and May 31, respectively.

During the six months ended June 30, 2023, 68,929 shares were purchased under the 2021 ESPP.

During the six months ended June 30, 2022, no shares were purchased under the 2021 ESPP.

As of June 30, 2023, there were 772,507 shares available for future issuance under the 2021 ESPP.

Offering periods under the 2021 ESPP commence on each June 1 and December 1, and end on the following November 30 and May 31, respectively.

During the nine months ended September 30, 2023, 68,929 shares were purchased under the 2021 ESPP.

During the nine months ended September 30, 2022, no shares were purchased under the 2021 ESPP.

As of September 30, 2023, there were 772,507 shares available for future issuance under the 2021 ESPP.

Stock-Based Compensation Expense

During the three and six months ended June 30, 2023 and 2022, the Company recorded compensation expense related to stock options, restricted common stock and ESPP share purchases for employees and non-employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:

Three Months Ended June 30,

Six Months Ended June 30,

During the three and nine months ended September 30, 2023 and 2022, the Company recorded compensation expense related to stock options, restricted common stock and ESPP share purchases for employees and non-employees, which was allocated as follows in the condensed consolidated statements of operations and comprehensive loss:

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development expense

8 unchanged sentences

Cancelled/forfeited

Outstanding as of June 30, 2023

Exercisable as of June 30, 2023

Outstanding as of September 30, 2023

Exercisable as of September 30, 2023

(1) The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock as of the end of the period.

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the six months ended June 30, 2023 and 2022 was $ 1.96 and $ 6.56 , respectively.

The following assumptions were used in determining the fair value of options granted during the six months ended June 30, 2023 and 2022:

Six Months Ended June 30,

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the nine months ended September 30, 2023 and 2022 was $ 2.02 and $ 5.88 , respectively.

The following assumptions were used in determining the fair value of options granted during the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

Risk-free interest rate

4 unchanged sentences

80.75 – 87.64

As of June 30, 2023, the Company had unrecognized stock-based compensation expense of $ 14.4 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.6 years.

As of September 30, 2023, the Company had unrecognized stock-based compensation expense of $ 14.3 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted-average period of 2.3 years.

Restricted Stock

3 unchanged sentences

Canceled/Forfeited

Unvested as of June 30, 2023

Unvested as of September 30, 2023

In June 2020, the Company granted 552,546 shares of common stock underlying restricted stock awards, and the Company has not subsequently granted any additional restricted stock awards.

The aggregate fair value of the restricted stock awards that vested during the six months ended June 30, 2023 and 2022 was $ 0.1 million and $ 0.2 million, respectively.

As of June 30, 2023, total unrecognized stock-based compensation expense related to unvested restricted stock awards was $ 0.2 million, which is expected to be recognized over a weighted-average period of 0.6 years.

The aggregate fair value of the restricted stock awards that vested during the nine months ended September 30, 2023 and 2022 was $ 0.1 million and $ 0.3 million, respectively.

As of September 30, 2023, total unrecognized stock-based compensation expense related to unvested restricted stock awards was $ 0.1 million, which is expected to be recognized over a weighted-average period of 0.4 years.

Net Loss Per Share

The following table sets forth the outstanding shares of common stock equivalents, presented based on amounts outstanding at each period end, that were excluded from the calculation of diluted net loss per share attributable to common stockholders during each period because including them would have been anti-dilutive:

Six Months Ended

Nine Months Ended

September 30,

Unvested restricted common stock

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements